Typically, stock options and contract options are settled physically, while index options are settled by cash.
However, we encourage you to always check the trading conditions for the settlement type for the respective option.
What is cash and physical settlement?
Cash settlement is when a contract is settled by way of cash. A physical settlement is when the underlying contract has physical delivery.
For example, if you have a long position in an AAPL stock call option. Generally, if the option is In-The-Money, Saxo will at expiry automatically purchase the AAPL stocks at strike price.
For more information about option exercise, please refer to this article.
How to check the settlement type?
Simply click the small [i] button on the trade ticket - example below.